Oil Slips in Choppy Trade as Market Weighs US Stockpiles, Libya
(Bloomberg) -- Oil slipped for a second day, extending a bumpy run so far this month, with the market focusing on Libyan supplies, key technical indicators and US inventory data.
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West Texas Intermediate fell 1.3% to settle below $75 a barrel after a recent geopolitical-driven rally failed to push futures above the 200-day moving average, which is now serving as a ceiling for price gains.
Another weekly decline in US crude stockpiles failed to shake futures from their doldrums. Inventories shrank 846,000 barrels last week, according to government figures. That was a smaller drop than the 3.4 million-barrel decline projected by the industry-funded American Petroleum Institute and larger than the 106,000-barrel reduction forecast by Bloomberg users.
Political risks in the Middle East and a threat to supply from Libya had supported recent gains. The North African country’s output has fallen by almost half this week, and there’s a risk of almost 1 million barrels a day coming off the global market.
The outages in Libya have been countered by a broadly bearish undertone — leading top Wall Street banks including Goldman Sachs Group Inc. and Morgan Stanley to shave their price forecasts for next year.
Market participants are weighing whether Libya’s crude exports halts will impact OPEC+ production plans. While the alliance’s market-reviewing body isn’t due to meet until Oct. 2, oil watchers remain divided over whether OPEC+ will go ahead with a planned production revival next quarter as demand fears continue to pressure prices.
The “real physical barrels” being removed from the market due to the halting of Libyan oil exports could potentially be offset by the potential of OPEC starting to slowly unwind its production cuts, said Rob Thummel, a portfolio manager at Tortoise Capital Advisors.
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